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The Financial Crisis, the Recession, and the American Political Economy: A Systemic Perspective
Charles H. Ferguson, Ph.D. '89, Filmmaker

Description: Charles Ferguson shows how useful a varied background in math, political science and business can be, as he dissects the complexities and recent crisis of the U.S. financial system. In a lecture that distills many of the arguments of his recent film, Inside Job, Ferguson conveys dispassionately yet persuasively the reasons we all should feel profound anxiety not only about the nation's financial institutions, but about our economic and political future as well.

Ferguson details the "securitization food chain," a system of investing (and gambling) with debt that U.S. financial institutions enthusiastically adopted around 15 years ago. Encouraged by friendly government policies, a handful of investment behemoths such as JP Morgan and Lehman Brothers began transforming the banking landscape, buying up mortgages and other forms of debt worth countless billions of dollars, and packaging these securities for buyers worldwide. Allied financial institutions became adept at selling cheap mortgages to ordinary people, creating an inflated housing market. Insurance and ratings companies bought in. The speed of growth and scale of this securities chain was unprecedented, recounts Ferguson -- as was its impact on the nation's economy, both at the market's peak, and after its collapse.

Ferguson provides a very detailed and pointed sidebar on industry incentives that underlay the wild growth years. These included allowing investment banks to bet on the failure of their own securities; and linking rating agencies' income to their approval of risky securities. Individuals inside big institutions made out like bandits, because they could. Senior executives in places like Bear Stearns took out over $1 billion in cash each in the years prior to the 2008 collapse. The head of Countrywide Mortgage saw the end coming, and cashed out over $100 million in stock. Asks Ferguson, "Why was such extreme behavior permitted? I have to conclude there was a complete abdication on the part of the regulatory system."

Ferguson finds galling both government apathy in regulating and in prosecuting high"end white collar crime, but perceives the reason: a financial services industry that "as it rapidly consolidated and concentrated became the dominant source not only of corporate profits but campaign contributions and political funding in the U.S." Evidence for unrestrained financial power lies in the fact that the government response to the crisis has been engineered by Wall Street insiders intent on shoring up firms too big to fail. Ferguson cites as well "corruption of the economics discipline," the rising role of money in politics, and the increasing concentration of wealth in the hands of a few.

The dominance of a single industry constitutes a deep change and danger for America, believes Ferguson. The nation "has evolved a political duopoly where two political parties agree on things related to finance and money." Without a political structure immune to such influence, Ferguson sees little likelihood of challenging the interests of the financial giants.

About the Speaker(s): Charles Ferguson was a mathematics major at the University of California at Berkeley and earned a doctorate in political science from MIT. During his postdoctoral work, he consulted for the White House, government trade and defense agencies, and American and European technology firms. In 1994, he co"founded Vermeer Technologies, which created the FrontPage website development tool, then sold it to Microsoft two years later. He lectured or pursued research projects at MIT, Berkeley, and the Brookings Institution before becoming a filmmaker. His first film, No End in Sight: The American Occupation of Iraq (2007) won the Special Jury Prize at Sundance, and was nominated for an Academy Award. Ferguson has also written several books, including High Stakes, No Prisoners: A Winners Tale of Greed and Glory in the Internet Wars, and Computer Wars: The Post"IBM World(co"authored with Charles Morris).

Host(s): School of Engineering, Engineering Systems Division

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Fri, 16 Dec 2011 17:41:57 -0500http://techtv.mit.edu/videos/16725-the-financial-crisis-the-recession-and-the-american-political-economy-a-systemic-perspective
http://techtv.mit.edu/videos/16725-the-financial-crisis-the-recession-and-the-american-political-economy-a-systemic-perspective
The Financial Crisis, the Recession, and the American Political Economy: A Systemic Perspective
MIT World — special events and lectures Report Card on President Obama: MIT Experts Assess President Obama on Afghanistan, Climate, and the Economy
Richard Samuels, Ph D, '80, Ford International Professor of Political Science, Director, Center for International Studies; Henry D. Jacoby, Professor of Management, MIT Sloan; Barry Posen, Ford International Professor of Political Science at MIT, Director Security Studies Program; Simon Johnson, Ronald A. Kurtz (1954) Professor of Entrepreneurship, Professor of Global Economics and Management, MIT Sloan School of Management

Description: President Obama scored abysmally on his mid"terms. A trio of MIT professors renders harsh judgment on the president half"way through his administration, and their assessments may leave listeners "weeping or depressed," in the words of moderator Richard Samuels.

National security expert Barry Posen reviews the administration's strategy and implementation of the war in Afghanistan. This conflict was adopted by the president and many Democrats as "the right war" following the wrong"headed invasion of Iraq, says Posen. But after investing tens of thousands more troops, and nearly $100 billion a year in Afghanistan, there remains uncertainty about how to complete the mission: to clear out the Taliban, secure critical regions, and build up a successful Afghan police force and government. While the Pentagon seems to support an "open"ended project aimed at defeating the Taliban," the president appears intent on limiting the venture, with the aim of drawing down troops beginning in July 2011.

But Posen is skeptical of the overall project: Afghan politics are corrupt, rife with ethnic rivalries, and the administration is incompetent, so the idea of setting up a government "to compete with the Taliban probably won't work well." Though there are frequent reports of killing Taliban leaders, "many doubt the Taliban can be killed off as fast they regenerate," and there is little chance of serious negotiation with them. The creation of a functioning Afghanistan "looks like a costly, lengthy gamble," but the strategy is driven by politics, says Posen: "Democrats are quite concerned not to appear authors of defeat."

The U.S. missed a vital opportunity to take the lead in addressing climate change, says Henry "Jake" Jacoby. Early on, the Obama administration "hurt prospects for progress," putting healthcare reform first when it had a choice between "the health of the people and the planet." And the administration didn't forcefully back either the House or Senate versions of climate legislation, which attempted to produce an "economically rational" approach to pricing greenhouse gas emissions. Then came the recession, which doomed any chance for moving climate legislation forward, since it "made imposing costs very difficult," says Jacoby.

What troubles him more is that the Obama administration has essentially "given the pulpit over to people against any action, and deniers." Republicans seem to be winning the war of public opinion, claiming that measures against climate change will strangle the economy, and are now pressing to relieve the EPA of its power to regulate CO2. The "outlook is dark," says Jacoby. "The word carbon is not said in polite company, and won't be said in Washington."

While it is a "terrific achievement" that we avoided another Great Depression, Simon Johnson is still "giving out failing grades" to this administration. Although Obama and his economic advisers basically got it right with the stimulus, they shockingly departed from best practices around banking policy, he believes. When major banks flounder, you close some of them down, fire managers, eliminate boards of directors, but "whatever you do, you cannot provide these banks with an unconditional bailout," he says. Rewarding banks for bad behavior is plain shocking and leaves us in "a very awkward and unpleasant position." By making banks too big to fail and sidestepping tough financial reform, he says, recovered banks will fight all the harder against any effort to be reined in. "By building implicit subsidy schemes into the structures in which banks survive," we are stuck with "a few banks with excessive power," and the "administration is responsible for setting us up for serious trouble down the road."

About the Speaker(s): Richard J. Samuels is also the Founding Director of the MIT Japan Program. In 2001 he became Chairman of the Japan"US Friendship Commission, an independent Federal grant"making agency that supports Japanese studies and policy"oriented research in the United States. In 2005 he was elected a member of the American Academy of Arts and Sciences.

Samuels served as Head of the MIT Department of Political Science between 1992"1997 and as Vice"Chairman of the Committee on Japan of the National Research Council until 1996. Grants from the Fulbright Commission, the Abe Fellowship Fund, the National Science Foundation, and the Smith Richardson Foundation have supported nine years of field research in Japan.

Samuels' next book, Securing Japan, will be published in 2007 by Cornell University Press. His previous books include Machiavelli's Children: Leaders and Their Legacies in Italy and Japan, a comparative political and economic history of political leadership in Italy and Japan,and "Rich Nation, Strong Army": National Security and the Technological Transformation of Japan,and The Business of the Japanese State: Energy Markets in Comparative and Historical Perspective.

His articles have appeared in International Organization, Foreign Affairs, International Security, The Journal of Modern Italian Studies,and The Journal of Japanese Studies.

Samuels received his Ph.D. from MIT in 1980.

Host(s): School of Humanities, Arts & Social Sciences, Center for International Studies

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Fri, 16 Dec 2011 17:18:56 -0500http://techtv.mit.edu/videos/16707-report-card-on-president-obama-mit-experts-assess-president-obama-on-afghanistan-climate-and-the-econ
http://techtv.mit.edu/videos/16707-report-card-on-president-obama-mit-experts-assess-president-obama-on-afghanistan-climate-and-the-econ
Report Card on President Obama: MIT Experts Assess President Obama on Afghanistan, Climate, and the Economy
MIT World — special events and lectures Lunch with a Laureate: Robert Merton
Robert C. Merton, Ph.D. '70, MIT Sloan School of Management Distinguished Professor of Finance

Description: As an MIT Museum audience peppers him with queries ranging from the barter system to development, trade relations, and the role of intuition in economics, Nobel Prize"winner Robert Merton pushes back against any assumptions that he might be a "renaissance man." He carefully steers listeners to his areas of expertise -- financial engineering and innovation, and risk management.

Merton starts with the breakthrough work that earned him his laurels, and which has recently stirred up controversy: derivatives. There are "no mysteries" to these financial instruments, insists Merton. They are neither complex nor threatening. Derivatives are "nothing more than insurance," coming into play when people exercise the right to buy or sell an asset or stock at a guaranteed price. Merton developed formulas for valuing such guarantees. These "tools of analysis" are now central to many areas of big finance, such as pricing corporate liabilities, student loan guarantee programs, and federal deposit insurance, and pop up in ordinary life as mortgages with the right to prepay, and car leases with a purchase option.

Merton relishes extending theory into the world of practice. He says, "I'm an engineer by nature; I like to solve problems." He's wrestling with two very big current projects: developing a new model for retirement that takes into account the uncertainties that unfold over 30"some years of a working life, and provides the desired standard of living when that working life ends; and improving the risk profiles of small, developing countries.

During give and take with the audience, Merton finds himself fending off some harsh questions around the role of derivatives in the current financial crisis, even suggestions that his contributions to economics have been discredited by the events of the past year or so. Merton declares that his models factored in the possibilities of such crises, and we should acknowledge that "rare events can occur." He does not view the avalanche of financial institution failures following the implosion of the housing market as evidence of flawed financial instruments so much as poor implementation. There is "no need to throw the paradigm out," he says. Beyond some of the "fools and knaves" complicit in the crisis, Merton sees structural problems, like senior managers, boards and government regulators "who did not understand what was going on." He concludes, "I do believe that what we had does not fundamentally have to be changed."

About the Speaker(s): Robert C. Merton earned a bachelor's degree in engineering mathematics from Columbia University, a master's degree in engineering mathematics from the California Institute of Technology, and a doctorate in economics from the Massachusetts Institute of Technology. He then served on the finance faculty of the MIT Sloan School of Management until 1988, when he moved to Harvard Business School.

Merton is a fellow of the American Association of Arts and Sciences, and a member of the National Academy of Sciences. He is also past president of the American Finance Association. He serves as co"editor of the Annual Review of Financial Economics and is a member of the MIT Sloan Finance Group Advisory Board, among many other appointments.

Merton was a founding principal of Long Term Capital Management, and is currently the developer of SmartNest, a pension management system that addresses deficiencies associated with traditional defined"benefit and defined"contribution plans.

Description: [from MIT Sloan School of Management Newsroom]
Channeling Thomas Jefferson and Theodore Roosevelt, MIT Sloan School of Management Professor Simon Johnson warns in a new book that a "new financial oligarchy" threatens not only the nation's economy, but its political core. In 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown , Johnson, says the book provides "the back story" for the 2008 financial crisis "and for all the issues being raised now around financial reform. We hope the book helps people have a badly needed conversation about what we must do to push back against dangerous, narrow interest groups that now threaten our economic well"being."

In 13 Bankers, Johnson, a former chief economist for the International Monetary Fund, and co"author James Kwak cite historical precedents and offer financial analysis to conclude that a second financial shock is inevitable unless the financial and political stranglehold held on Washington by the nation's biggest banks is broken. "The best defense against a massive financial crisis is a popular consensus that too big to fail is too big to exist," the authors write. "This is at its heart a question of politics, not of economics or of regulatory technicalities."

The book points out that the current concentration of financial and political power is not unlike other moments in American history. President Theodore Roosevelt, for example, challenged the monopoly powers of banker and industrialist J.P. Morgan. "No one thought he could win," Johnson says in an interview, "but he did succeed in the first prosecution of a corporation under the Sherman Antitrust Act." Roosevelt, he said, began a process that helped people understand the need to rein in the power of corporate giants, such as John D. Rockefeller's Standard Oil, "which was arguably more important as a single company in 1910 than J.P. Morgan was then or J.P. Morgan Chase is now," says Johnson.

Similar leadership is needed from the Obama administration and Congress now, according to 13 Bankers, which concludes that regulatory changes and other responses to date have been vastly inadequate. Johnson supports the administration's proposed consumer protection measures, but overall, "You can't just tweak a few rules and expect to rein in these big institutions." Instead, the book calls for the six biggest banks to be broken up and for hard limits to be imposed so that banks cannot rebuild themselves into political and financial powerhouses. "Saying that we cannot break up our largest banks is saying that our economic futures depend on these six companies," notes Johnson. "That thought should frighten us into action."

Host(s): Sloan School of Management, MIT Sloan School of Management

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Fri, 16 Dec 2011 15:59:00 -0500http://techtv.mit.edu/videos/16655-13-bankers-the-wall-street-takeover-and-the-next-financial-meltdown
http://techtv.mit.edu/videos/16655-13-bankers-the-wall-street-takeover-and-the-next-financial-meltdown
13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
MIT World — special events and lectures The Economic Meltdown: What Have We Learned, if Anything?
Paul Krugman, PhD'77, Professor of Economics and International Affairs; Woodrow Wilson School of Public and International Affairs, Princeton University

Description: The U.S. has had more than 70 years to come to terms with the Great Depression, and we really thought we knew how to avoid another one, says Paul Krugman. "It wasn't supposed to be possible. Then came the current crisis."

So how to explain the Great Recession of 2008? Krugman suggests a combination of factors: First, he thinks we "mislearned" some of the lessons of the Crash. We developed an "unwarranted belief that it was easy for the Federal Reserve to prevent the crisis." We forgot how difficult it is to get "policy traction" when financial markets are really unstable, and conveniently overlooked how things had "gone awry in the past" when we deregulated the banks in more recent years. We grew too literal"minded in our notion of banks, imagining "a big marble building with a row of counters, with Jimmy Stewart," when in fact, we'd created new institutions that used deposits to make innovative but sometimes disastrous investments. We didn't immediately recognize the 21st"century version of bank runs, which didn't involve mobs in the street but "investors refusing to roll over their repos."

Not only did we get a replay of the collapse, but we're witnessing a replay of the response as well, including "obvious failures to understand the depth of the problem." Big government is again under attack, even though it has "protected the system from total meltdown." Just like the '30s, some say we've passed the worst -- when, says Krugman, "this thing ain't over." Many economists project years of higher unemployment, "years of huge suffering." And instead of acknowledging these continuing impacts with appropriate moves to support the economy, "we're withdrawing policies from the economy quite soon," he says, repeating another mistake from the past.

Politics plays a large part in this sorry rerun. Officials feel they can only pass partial remedies through Congress. But in this case, "half a loaf may be not much better than none," because "if the economy still looks lousy when you do half"hearted policy, the conclusion of the political process is not that you need to do more of it, butthat the policy failed, so we can't do more." That's what happened with the stimulus.

Krugman is deeply worried about what comes next, seeing us stuck with massive unemployment; people behaving as though we've avoided disaster, and returning to "the same rhetoric about private sector dynamism and the evils of big government;" and no political will to "change either the economy or the intellectual climate."

About the Speaker(s): Paul Krugman received the Nobel Prize in Economics in 2008, for "his analysis of trade patterns and location of economic activity." He became a regular columnist for The New York Times Op"Ed Page in 1999. Krugman is the author or editor of 20 books and more than 200 journal articles and edited volumes, specializing in "new trade theory," which concerns international trade. Krugman's more recent scholarship involves economic and currency crises. He received the John Bates Clark medal in 1991 from the American Economic Association, which is awarded to "that economist under forty who is adjudged to have made a significant contribution to economic knowledge."

Krugman received his B.A. from Yale University in 1974, and his Ph.D. from MIT in 1977. He taught at Yale, Stanford, and MIT, where he was Ford International Professor of Economics.

Host(s): School of Humanities, Arts & Social Sciences, Economics Department

Description: In a lively discussion with Simon Johnson, Lawrence Fish deconstructs the near collapse of the banking system and points out the multiple factors that have contributed to the financial crisis.

Topics in the discussion include the banks that did not fail, how Canadian and other countries' banking systems also did not fail, the political landscape of banking regulation, ethics, bonuses in the banking industry and the ethics oath signed by 50% of the students at the Harvard Business School.

Description: "Paint it Black" is all about red -- the mountain of debt challenging the viability of all the nation's institutions. James Poterba takes a scholarly approach to moderating this detailed discussion of the unfolding economic collapse, its ramifications on business and the possible impact of governmental remedies.

"From the standpoint of economic analysis," says Poterba, "this appears to be a once"in"a "generation or perhaps longer global storm." He expands on this statement throughout, with forays into macroeconomics, credit and equity markets, the tools historically and currently wielded by government to interfere with economic crises, and an occasional joke (at the expense of economists). He engages his speakers in their areas of expertise.

Alan Cohen discusses how the practice of "shadow banking" helped trigger the subprime mortgage crisis. Non"financial institutions invented ways to package mortgages, slicing and dicing them into securities that could be traded without oversight. These credit derivative instruments existed without adequate capital backing, and so were exceedingly risky. Cohen also blames rating agencies for becoming complicit in the game, talking to investment bankers "about what was necessary to get AAA." There were warning signs, says Cohen, as early as 2006 of "deteriorating housing numbers, but the rating agencies didn't downgrade." Suddenly, in 2007, these packaged, unregulated securities lost their value, and banks, faced with debt, ended up selling assets under pressure.

Cohen says that TARP funds won't necessarily free up credit for small business or the mortgage market, since banks and other institutions are still trying to pay off vast debt. In this over"leveraged environment, no financial institution trusts another, and companies seeking loans must demonstrate they represent extremely low risk. Some lenders worried about "getting hurt by entrepreneurial activity" may ask for rights, or participation, in the venture. "To attract the more disciplined lender, you must provide more bang for the buck," says Cohen.

David Tabak reckons that volatility poses the premiere challenge for small business. At a time of great flux for all markets, firms must attempt to calculate what their patents and investments will be worth months and years down the road. He remains guarded about whether government intervention will calm the waters. For one thing, bank stress tests must decide how much value actually exists in different tiers of assets held by banks -- including loans to small business. Some banks may be partly nationalized if they fail to meet capital reserve requirements. This won't fuel stability and growth in the private sector. Also, Tabak sees some businesses holding out for a second round of government funding, or for investment tax credits.

Tabak's advice for the government: "Put in an option clearing corporation, and ban credit default swaps for speculators." To businesses, Tabak says, "Get your financial statements right," and "ask, 'What do I need in the short and long run, what are the differences between the two, and plan out.'" There are strong opportunities for those who survive.

About the Speaker(s): James Poterba is also the President of the National Bureau of Economic Research and a Fellow of the American Academy of Arts and Sciences and the Econometric Society. He is the President of the National Tax Association, a Vice President of the American Economic Association, and has served as a Director of the American Finance Association.

Poterba's research focuses on how taxation affects the economic decisions of households and firms. His recent work has emphasized the effect of taxation on the financial behavior of households, particularly their saving and portfolio decisions. He has been especially interested in the analysis of tax"deferred retirement saving programs such as 401(k) plans and in the role of annuities in financing retirement consumption.

Poterba served as a member of the President's Advisory Panel on Federal Tax Reform in 2005. He is a trustee of the College Retirement Equity Fund (CREF), and a former member of the MIT 401(k) Plan Oversight Committee. He edited the Journal of Public Economics, the leading international journal for research on taxation and government spending, between 1997 and 2006. He is a member of the advisory board of the Journal of Wealth Management. He is a co"author of The Role of Annuity Markets in Financing Retirement (2001), and an editor or co"editor of Global Warming: Economic Policy Responses (1991), among other publications.

Poterba studied Economics as an undergraduate at Harvard, and received the Doctor of Philosophy degree in Economics from Oxford University, where he was a Marshall Scholar. He has been an Alfred P. Sloan Foundation Fellow, a Batterymarch Fellow, a Fellow at the Center for Advanced Study in Behavioral Sciences, and a Distinguished Visiting Fellow at the Hoover Institution at Stanford University.
David Tabak is a member of NERA's Securities and Finance Practice. In the area of securities class actions, Tabak has performed analyses involving issues of class certification, liability, materiality, affected trading volume, and damage calculations in cases with allegations ranging from product issues to the value of an issuer of subprime mortgages. He has appeared as an expert in state, federal, and bankruptcy court, and before arbitration panels, including the National Association of Securities Dealers, the American Arbitration Association, and the International Chamber of Commerce International Court of Arbitration. His publications in journals and books cover such topics as the use of event studies to measure damages in commercial disputes, economic analysis of market efficiency, valuation discounts for lack of marketability, and the application of statistics in litigation analyses.

Tabak earned his Ph.D. and M.A. degrees in Economics from Harvard University and his B.S. in Economics and B.S. in Physics from MIT.
Alan Cohen joined York Capital in March 1998 and is a partner of the Firm. He is also the Portfolio Manager of the York Credit Opportunities funds. From 1996 to 1998, he worked as a Vice President and Analyst for Franklin Mutual Advisers Inc. For the two years prior, Cohen was a Director in the High Yield Trading Group at Smith Barney Holdings Inc.

From 1991 to 1994, he was a Vice President at Donaldson, Lufkin & Jenrette, Inc., where he traded high yield and distressed bonds. For the five years prior, Cohen was a Vice President at Goldman, Sachs & Co., where he analyzed and traded high yield bonds. Cohen currently is a member of the Board of Directors, in his capacity as a York employee, of the Hundred Acre Group, LLC.

Cohen received a B.S. in Economics from MIT and an M.B.A. from the Harvard Business School.

Description: These panelists use the lens of systems engineering to focus sharply on some signature global challenges in finance, healthcare, energy and IT.

The system failure that undid the small but influential financial services industry was a few decades in the making, says John Reed. In the '80s, a sea change swept over firms trading hundreds of billions of dollars each day. The new mantra was "shareholder value." Firms ditched time"honored rules of capitalizing trades and guaranteeing risk in order to build investor profits. The crystallization of this philosophy was the mortgage"backed security. Trillions of dollars went into "off"balance"sheet investment vehicles." When the nation's mortgage portfolio deteriorated, not just one node in the system collapsed, but all of them. To fix the financial sector, says Reed, "A systems view will be essential, including behavioral considerations, not just economics."

There's no point in saying U.S.healthcare is broken unless you can offer a vision. For Denis Cortese, this means designing a "learning organization." Cortese maps out this organization's goals: simple value, with "better outcomes, better safety, and better service at a lower cost over time." His proposed system would focus on the patient's needs in order to "raise the health of the entire population."

Cortese doesn't see a role for the government in his ideal organization. But there must be better metrics for determining value, coordination among large and small healthcare organizations, and "common principles in the payer domain." Ultimately, we'll need to define quality healthcare and set outcomes: "It won't be perfect, but it will be better than where we are today."

Nine billion people will inhabit the planet by 2100, and many of them will either be acquiring energy for the first time, or wanting more. This has "unpleasant if not catastrophic" implications for greenhouse gas emissions, says Steven Koonin. Powering up while securing affordable energy and minimizing emissions involves better modeling of the physical and biological climate system; overcoming the inertia of our current transportation and building industries; and improving the "patchwork" of our current energy grid. Koonin sees immediate opportunities to cut energy use in half in cities, but we "must bring policy up to speed" to make this happen.

Tackling global problems won't be possible without an improvement in complex organizational systems, says Irving Wladawsky"Berger, which in contrast to physically engineered systems, haven't progressed in the past century or so. Change is creeping in, though, as organizations manage increasing amounts of data with more integrated instrumentation and swelling computer capacity. Wladawsky"Berger sees new tools emerging such as cloud computing and networked data centers, leading to the standardization and customization of services for producers and consumers. He believes that the "merging of the digital infrastructure with the physical infrastructure" will lead to new ways of life, including smarter cities with smart traffic systems that reduce congestion and pollution.

About the Speaker(s): James A. Champy is an authority on the management issues surrounding business reengineering and organizational change. Prior to joining Perot Systems, Champy was chairman and CEO of CSC Index, the management consulting arm of Computer Science Corporation. He was one of the original founders of Index, a $200"million consulting practice that was acquired by CSC in 1988.

Champy has also authored such well"received books as Reengineering the Corporation: A Manifesto for Business Revolution, which sold more than 2,500,000 copies and spent more than a year on The New York Times bestseller list. His articles appear in major newspapers and magazines throughout the world.

Champy earned his B.S. and his M.S. in civil engineering from MIT, and his J.D. from Boston College Law School. Champy serves on the board of Analog Devices, Inc., on MIT's Board of Trustees, and on the Board of Overseers of the Boston College Law School.